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11th Standard CBSE Accountancy - Depreciation, Provisions and Reserves Four and Five Marks Questions

Published on: 08/10/2019

Depreciation, Provisions and Reserves

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Questions:

Generic 4

2 x 4 = 8

Rajan purchased a machine on 1 October, 2017 for Rs. 500,000 plus CGST and SGST @ 6% each. He paid Rs. 20,000 for loading/unloading and carriage expenses to bring the machine to factory. He further incurred Rs. 25000 for installing the machine. Determine:
(i) How much amount did Rajan pay to vendor of machine?
(ii) How much amount will be debited to Machinery Account?
(iii) Pass the Journal Entries giving effect to the transection.

On April 1,2011 X Ltd. Purchased Machinery for Rs.1,00,000with CGST and SGST @ 6%each. The accounting year of the Company ends on 31st Dec. every year. Depreciation @ 10%p.a. on the initial cost is charged to P & L Account and credited to a separate account known as 'provision for depreciation' account. On 1st July 2013,the machine purchased on 1st April 2011was sold for Rs. 60,000.You are required to prepare machinery Account and Provision for Depreciation Account upto 2013.

Generic 6

7 x 6 = 42

Kumar Transport Co. had a few buses on 1.4.2011. The book value of such buses was Rs. 7,25,000. The Transport Company purchased another bus for Rs. 2,25,000 on 31st December, 2011. A sum of Rs.15,000 was paid as brokerage. The Company provides 15% as depreciation on the written down value. The newly purchased bus is sold on 1.8.2013 for Rs.1,90,000. Show the Buses Account for the years 2011-12 to 2013-14.

X Company Ltd. has plant and machinery which on 1st Jan, 2014 was entered in the ledger under two separate accounts viz., Machinery A/c Rs.1,28,600 and Provision for Depreciation of Machinery A/c Rs.72,520.The company maintains a machinery register showing full details. Depreciation is being charged at 10% per annum on cost On 30.6.2014 it was decided to stop operations of a section of the plant and sell its machinery, it was purchased on 1.1.2005 at Rs.12,000. It was sold on 15.12.2014 to Y Ltd. for Rs.1,600. Cost of wages for dismantling was Rs. 100. New and more efficient machinery was purchased on 1.8.2014 at cost (including erection) of Rs. 20,000. This new machinery commenced operation on 1.10.2014. Open machinery account, Provision for depreciation account and machinery disposal account.

On 1 April, 2012 Gupta Bros.purchased two machines for Rs.1,50,000 each. Depreciation at the rate of 10% on original cost of machine was provided. On 31st March, 2014, one machine was sold for Rs.1,10,000. An improved model with a cost of Rs.1,60,000 was purchased on the same day. You are .required to show the machinery disposal account for the year ending 31st March 2014.

On 1st April, 2011 a firm purchased a machinery for Rs.2,00,000. On 1st October in the same accounting year additional machinery costing Rs. 1,00,000 was purchased. On 1st October, 2012 the machinery purchased on 1st April, 2011 having become obsolete, was sold off for Rs. 90,000. On 1st October, 2013 new machinery was purchased for Rs. 2,50,000 while the machinery purchased on 1st October, 2011 was sold for Rs. 85,000 on the same day. The firm provides depreciation on its machinery @ 10% per annum on original cost on 31st March every year.

Green Ltd. purchased a machinery on 1st May, 2011 for Rs. 60,000. On 1st July, 2012 it purchased another machine for Rs. 20,000
On 31st March, 2013, it sold off the first machine purchased in 2011 for Rs.38,500 and on the same date purchased a new machinery for Rs.50,000. Depreciation is provided at 20% p.a. on the original cost each year. Accounts are closed each year on 31st December.
Show the Machinery Account for three years

Machine was purchased on 1st Jan., 2000 for Rs. 19,400 and Rs.600 were spent on its installation. On 1st July 2000, in the same year, additional machinery costing Rs.10,000 was purchased. On 1st July, 2002, the machine purchased on January 2000, having become useless was sold for Rs. 8,000 and on the same date a new, machine was purchased at a cost of Rs.15,000. Depreciation is provided annually on 31st December @ 10% per annum on original cost.

A Maruti van was purchased on 01/01/2000 for Rs.60,000 and Rs.5,000 was spent on its repair and registration. On 01/07/2001 another van was purchased for Rs. 70,000
On 01/01/2002, the van purchased on 01/01/2000 was sold for Rs.45,000 and a new van costing Rs.1,70,000 was purchased on the same date. Show the Maruti van Account from 2000-2002 on the basis of Straight Line Method, if the rate of depreciation charged @ 10% p.a. Assume that books are closed on 31^stDec. every year.

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Answers Key:

Generic 4

2 x 4 = 8

(i) Amount paid to Vendor of Mach

	Rs
Value (cost)of Machine	5,00,000
Add:CGST @ 6%	30,000
SGST @ 6%	30,000
	5,60,000

(ii) Amount debited to Machinery Account:

Cost	5,00,000
Carriage expenses	20,000
Installation charges	25,000
	5,45,000

(iii)

Journal Entries
Date	Particulars	Amount Dr.(Rs)	Amount Cr.(Rs)
2017	Machinery A/C Dr	5,00,000
Oct 1	Input CGST A/C Dr	30,000
	Input SGST A/C Dr.	30,000
	To Bank A/C (Being Machinery purchased)		56,000
	Machinery A/c Dr.	45,000
	To Bank A/c (Being carriage and installation charges paid)		45,000

Dr. Machinery Account Cr.
Date	Particulars	Amount(Rs.)	Date	Particulars	Amount(Rs)
2011			2011
Apr.1	To Bank A/c	1,00,000	Dec. 31	By Balance c/d	1,00,000
		1,00,000			1,00,000
2012			2012
Jan 1	To Balance b/d	1,00,000	Dec 31	By Balance c/d	1,00,000
		1,00,000			1,00,000
2013			2013
Jan 1	To Balance b/d	1,00,000	July 1	To Bank A/c	60,000
			July 1	By Prov.for Dep.A/c	22,500
			July 1	By Loss on Sale	17,500

		1,00,000			1,00,000

Dr. Provision for Depreciation Account Cr.
Date	Particulars	Amount(Rs.)	Date	Particulars	Amount(Rs)
2011			2011
Dec 31	To Balance c/d	7,500	Dec 31	By Depreciation A/c	7,500
		7,500			7,500
2012			2012
Dec 31	To Balance b/d	17,500	Jan 1	By Balance b/d	7,500
			Dec 31	By Depreciation A/c	10,000
		17,500			17,500
2013			2013
Dec 31	To Balance c/d	22,500	Jan 1	By Balance b/d	17,000
			Jan 1	By Depreciation A/c	5,000
		22,500			22,500

Generic 6

7 x 6 = 42

In the Books of Kumar Transport Co

Dr. Buses Account Cr.
Date	Particular	Amount(Rs)	Date	Particulars	Amount(Rs)
1.4.11	To Balance b/d	7,25,000	31.3.12	By Depreciation A/c (On Old Buses)	1,08,750
31.12.11	To Bank A/c (2,25,000+15,000)	2,40,000	31.3.12	By Depreciation A/c (On New Bus for 3 Months)	9,000
			31.3.12	By Balance c/d:
				6,16,250(O)
				2,31,000(N)	8,47,250
		9,65,000			9,65,000
1.4.12	To Balance b/d	8,47,250	31.3.12	By Depreciation A/c (On Old Buses)	92,438
			31.3.12	By Depreciation A/c	34,650
			31.3.12	By Balance c/d:
				5,23,812(O)
				1,96,350(N)	7,20,162
		8,47,250			8,47,250
1.4.13	To Balance b/d	7,20,162	1.8.13	By Depreciation A/c (On New Bus for 4 Months)	9,818
	To Profit & Loss A/c (Profit on Sale)	3,468	1.8.13	By Bank A/c (Sales)	1,90,000
			31.3.14	By Depreciation A/c (On Old Buses)	78,572
			31.3.14	By Balance c/d	4,45,240
		7,23,630			7,23,630
1.4.14	To Balance b/d	4,45,240

In the Books of X Ltd

Dr. Machinery Account Cr.
Date	Particulars	Amount(Rs)	Date	Particulars	Amount (Rs)
2014			2014
Jan 1	To Balance b/d	1,28,600	June 30	By Machinery Disposal A/c	12,000
Aug 1	To Bank A/c	20,000
			Dec 31	By Balance c/d	1,36,600
		1,48,600			1,48,600

Dr. Provision for Depreciation Account Cr.
Date	Particulars	Amount(Rs)	Date	Particulars	Amount(Rs)
2014			2014
June 30	To Machinery Disposal A/c	11,400¹	Jan 1	By Balance b/d	72,520
			June 30	By Depreciation A/c	600
Dec 31	To Balance c/d	73,880	Dec 31	By Depreciation A/c	12,160²
		85,280			85,280

Dr. Machinery Disposal Account Cr.
Date	Particular	Amount(Rs)	Date	Particulars	Amount (Rs)
2014			2014
July 30	To Machinery A/c	12,000	July 30	By Provision for Depreciation A/c	11,400
July 30	To Statement of P&L	900
			July 30	By Cash A/c (Sales)	1,500
		12,900			12,900

Working Notes :
1. Depreciation on assets worth Rs.12,000 for 9 years and 6 months = Rs.1,200\(\times\)9 + Rs.600 = Rs.11,400

2.Depreciation on asset (Rs.1,28,600 - 12,000) @ 10%	Rs 11,660
Add: Depreciation on Rs. 20,000 for 3 months	Rs 500
Total Depreciation	Rs12,160

In the Books of Gupta Bros

Dr. Machinery Account Cr
Date	Particulars	Amount(Rs)	Date	Particulars	Amount(Rs)
2012			2013
April 01	To Bank A/c (Rs 1,50,000\(\times\)2)	3,00,000	March 31	By Depreciation	3,000
			March 31	By Balance c/d	2,70,000
		3,00,000			3,00,000
2013			2014
April 1	To Balance b/d	2,70,000	March 31	By Depreciation	30,000
2014			March 31	By Machinery
March 31	To Bank A/c	1,60,000		Disposal A/c	1,20,000
			March 31	By Balance c/d	2,80,000
		4,30,000			4,30,000

Dr. Machinery Disposal Account Cr.
Date	Particulars	Amount(Rs)	Date	Particulars	Amount(Rs)
2014			2014
Mar 31	To Machinery A/c	1,20,000	Mar 31	By Profit&Loss A/c
				(Loss)	10,000
			Mar 31	By Bank A/c	1,10,000
		1,20,000			1,20,000

In the Books of

Dr. Machinery Account Cr.
Date	Particulars	Amount (Rs)	Date	Particulars	Amount(Rs)
2011			2012
Apr 1	To Bank A/c	2,00,000	Mar 31	By Balance c/d	3,00,000
Oct 1	To Bank A/c	1,00,000
		3,00,000			3,00,000
2012			2012
Apr 1	To Balance b/d	3,00,000	Oct 1	By Bank A/c (Sale)	90,000
			Oct 1	By Provision for Depreciation A/c	30,000
			Oct 1	By Profit & Loss A/c (Loss)	80,000
			2013
			March 31	By Balance c/d	1,00,000
		3,00,000			3,00,000
2013			2013
Apr 1	To Balance b/d	1,00,000	Oct 1	By Bank A/c (Sale)	85,000
Oct 1	To Bank A/c	2,50,000		By Provision for Depreciation A/c	20,000
Oct 1	To profit &Loss A/c (Profit)	5,000
			2014
			Mar 31	By Balance c/d	2,50,000
		3,55,000			3,55,000

Dr. Depreciation Account Cr.
Date	Particulars	Amount(F)	Date	Particulars	Amount()
2012			2012
Mar 31	To Provision for Depreciation A/c	25,000	Mar 31	By Profit & Loss A/c	25,000
		25,000			25,000
2012			2013
			Mar 31	By Profit & Loss A/c	20,000
Oct 1	To Provision for Depreciation A/c	10,000
2013
Mar 31	To Provision for Depreciation A/c	10,000
		20,000			20,000
2013			2014
Oct 1	To Provision for Depreciation A/c	5,000	Mar 31	By Profit & Loss A/c	17,500
2014 Mar 31	To Provision for Depreciation A/c	12,500
		17,500			17,500

Dr. Provision for Depreciation Account Cr.
Date	Particulars	Amount(Rs.)	Date	Particulars	Amount(Rs)
2012			2012
Mar 31	To Balance c/d	25,000	Mar 31	By Depreciation A/c (20,000+5,000)	25,000
		25,000			25,000
2012			2012
Oct 31	To Machinery A/c		Apr 1	By Balance A/c	25,000
	(20,000+10,000)	30,000	Oct 1	By Depreciation A/c	10,000
2013			2013
Mar 31	To Balance c/d	15,000	Mar 31	By Depreciation A/c	10,000
		45,000			45,000
2013			2013
Oct 1	To Machinery A/c		Apr 1	By Balance b/d	15,000
	(5,000+10,000+5,000)	20,000	Oct 1	By Depreciation A/c	5,000
2014			2014
Mar 31	To Balance c/d	12,500	Mar 31	By Depreciation A/c	12,500
		32,500			32,500
			Apr 1	By Balance b/d	12,500

Dr. Machinery Account Cr.
Date	Particulars	Amount(Rs)	Date	Particulars	Amount(Rs)
2011			2011
May 1	To Bank A/c	60,000	Dec 31	By Depreciation A/c (for 8 months)	8,000
			Dec 31	By Balance c/d	52,000
		60,000			60,000
2012			2012
Jan 1	To Balance b/d	52,000	Dec 31	By Depreciation A/c (12,000+2,000)	14,000
July 1	To Bank A.c	20,000	Dec 31	By Balance c/d (40,000+18,000)	58,000
		72,000			72,000
2013			2013
Jan 1	To Balance b/d	58,000	Mar 31	By Bank A/c (Sale)	38,500
Mar 31	TO Bank A/c	50,000		By Depreciation A/c (for 3 months)	3,000
Mar 31	To Profit & Loss A/c (Profit on sale)	1,500	Dec 31	By Depreciation A/c (4,000+7,500)	11,500
			Dec 31	By Balance c/d	56,500
2014		1,09,500			1,09,500
Jan 1	To Balance b/d	56,500

In the Books of the

Dr. Machinery Account Cr.
Date	Particulars	Amount(Rs)	Date	Particulars	Amount(Rs)
2000			2000
Jan1	To Bank A/c (M₁)	19,400	Dec 31	By Depreciation A/c (2,000+500)	2,500
July 1	To cash A/c	600
July 1	To Bank A/c (M₂)	10,000	Dec 31	By Balance c/d	27,500
		30,000			30,000
2001			2001
Jan 1	To Balance b/d	27,500	Dec 31	By Depreciation A/c	3,000
			Dec 31	By Balance c/d	24,5000
		27,500			27,500
2002			2002
Jan 1	To Balance b/d	24,500	July 1	By Bank A/c	8,000
July 1	To Bank A/c (M₃)	15,000	July 1	By Loss on Sale of Machinery	7,000
			July 1	By Depreciation (1,000+1,000+750)	2,750
			Dec 31	By Balance c/d	21,750
		39,500			39,500

In the books of

Dr. Maruti Van Account Cr.
Date	Particulars	Amount(Rs)	Date	Particulars	Amount(Rs)
2000			2000
Jan	To Bank A/c (I)	60,000	Dec 31	By Depreciation A/c	6.500
	To Cash A/c		Dec 31		58,500
		65,000			65,000
2001			2001
Jan 1	To Balance b/d	58,500	Dec 31	By Depreciation
		70,000		I. 6,500
				II. 3,500	10,000
			Dec 31	By Balance c/d
				I. 52,000
				II. 66,500	1,18,500
		1,28,500			1,28,500
2002			2002
Jan 1	To Balance b/d
	I. 52,000
	II. 66,500	1,18,500	Dec 31	By Depreciation A/c
Jan 1	To Bank A/c (III)	1,70,000		I. 7,000
				II. 17,000	24,000
			Dec 31	By Balance c/d
				II. 59,500
				III. 1,53,000	2,12,500
		2,88,500			2,88,500